Real Data Essay Example | Topics and Well Written Essays - 750 words

Real Data - Essay Example The data gathered can be used to perform a number of operations such as mean, standard deviation, variance, correlation etc. Therefore it is safe to say that real data makes it possible to make quantitative classifications. That is why we can say that real data makes it possible to run statistical analysis. The research has been carried out on the results of 2008 American Presidential Elections. The Exhibit 1 shows actual results of elections. The tables are divided according to percentage lead of each president according to states. The data in Exhibit 2 shows pre election polls for each candidate. The data in Exhibit 2 two has been divided according to agencies which had delivered results or conduction these pre election polls. Column D in Exhibit 2 reflects leads to each respective president in states of polls. The data presented is real in nature for Exhibit 2. This is because the format is percentages of actual responses received from the public. Exhibit 1 also shows actual historical data as the responses are shows as percentage of total votes received by each presidential candidate. In column E of exhibit 2 we have prepared another category denoted by numbers. This is a better way to convert real scale to nominal scale and then convert it to percentage to get a solution. The number ‘2’ represents a tie, ‘1’ lead of Obama and ‘0’ lead of McCain. If we calculate the percentage of ‘1’ to the entire population we can calculate how many polls considered Obama to win the elections. The percentage of polls that showed Obama as the winner were 71% where as only 10% predicted a tie of votes. This shows another quality of nominal data that it has to be converted into percentages to reach an analysis. The presidential elections did show a victory for president Obama which reveals that analysis using real data was successful in predicting election results. Nominal data can lead to only qualitative

Managing People Essay Example | Topics and Well Written Essays - 3500 words

Managing People - Essay Example If the geographical scope, financial strength, and wide customer base fail to persuade someone about the prominence of Starbucks as an icon of the corporate world, one can come up with a long list of laurels and awards that the company holds under its name, highlighting its success and reputation (Clark, 2007, p. 427; Michelli, 2006, p. 387). Zagat’s Survey of National Chain Restaurants for the year 2010 identified Starbucks as â€Å"No. 1 Best Coffee† and â€Å"No.1 Most Popular Quick Refreshment Chain†. For the past decade, it has appeared on the Fortune’s list of â€Å"Most Admired companies in America† and â€Å"The 100 Best Companies to Work for† (Mangold, 2010, p. 82). Quite understandably, a significant portion of this impeccable success enjoyed by Starbucks comes from its ability to manage, effectively and efficiently, its human resource. As a service oriented business, employees determine the customer service quality of the company, represent the company and their productivity determines the overall productivity of the organisation (Hellriegel & Slocum, 2007, p. 97). This paper is an attempt to discuss the leadership, organisational culture, organisational structure, organisational learning and employee motivation techniques employed by Starbucks. The paper argues that the prime leadership for Starbucks comes from Howard Schultz, for most parts, has appeared as a transformational leader. In fact, fitting the profile of a transformational leader, has allowed Schultz to inspire and create many more leaders in the company who have assisted in driving the growth by providing a wonderful customer service experience (Behar, 2007, p. 489). The culture of the company can be classified as collaborative work culture, one where much importance is placed on employee empowerment, employee engagement and worker welfare. More importantly, it is the decentralised, flat and matrix structure is the prime entity, which supports s uch as a work culture through promoting open and efficient communication amongst employees (Gilbert, 2008, p. 111). Moreover, the employee motivation at Starbucks can be understood through the application of Expectancy theory and Equity theory of Motivation. Besides, the above mentioned points, the paper will also outline a change management processes for the company and would provide recommendations based on the findings and analysis. Findings and Analysis Leadership There is evidence to believe that, Howard Schultz has been a transformational leader for Starbucks. The prime reason for it is rooted in the fact that Schultz, right from the very beginning had a vision in mind. It was in the early 1980s Howard Schultz, the current CEO, Chairman and President of the company, joined Starbucks as head of marketing. Schultz, after a trip from Italy, realised that to those people, coffee meant much more than just a drink. It was an experience, glue holding together people and their convers ations and bringing them closer (Schultz & Yang, 1999, p. 27). Schultz landed upon the idea of creating coffee houses where coffee becomes an enchanting and relaxing experience rather than a mere product. Jerry Baldwin had left the

Composition of Minerals in Soil Related with Date Fruits

Composition of Minerals in Soil Related with Date Fruits Research Proposal Topic Study the Composition of Minerals in Soil Related with Date Fruits using AAS. Introduction Generally, plants require optimum mineral nutrients from the soil other than water, sunlight and carbon dioxide. Mineral is a crystalline solid of inorganic element. It has their own characteristic on physical properties such as crystalline structure, hardness, density, flammability, and color with certain chemical composition that form by natural processes. Mineral nutrients can be classified into two types of nutrients which are micronutrients and macronutrients. Essential mineral composition with sufficient quantity is important in a plant as it affect the plant productivity or fruit quality. Plants also not grow well if one or more elements are present in too large quantity which can be toxicity to the plant. This shows that the levels of elements must in balance with other nutrients. These nutrients perform a variety of functions in plants especially in the structural components of cell. Date palm or Phoenix dactylifera will involve in this research for the study of the minerals in soils and date fruits. Date palms need the specific composition of minerals in soils in order to produce fruits. Soil of plant analysis is useful for estimating trace element availability and determining the specific type of mineral presence in the soil which can prevent the deficiencies of fruit production. Determination of the minerals in fruit is important in order to study the correlation between the minerals in soils from date palm with date fruits using atomic absorption spectroscopy (AAS). Literature Review Minerals A mineral is a natural inorganic solid with a definite chemical composition such as K, Ca, Mg and Na. It is inorganic crystalline solid that has the crystal structure of long ranged order of atomic arrangement. Minerals are divided into groups based on their chemical composition with different chemical features of each groups. Characteristics and Properties Minerals can be known by their characteristics such as crystalline structure, inorganic elements, form by natural process, has particular chemical composition and specific physical properties. Minerals are crystalline solids that the atoms are arranged in repeating pattern. Mineral also comes from the organic substances which involved proteins, carbohydrates, and oils.Besides, minerals also commonly come from the inorganic compound (Geoscience News and Information, 11 November 2014). Minerals form by natural processes occurs in or on Earth. A diamond is a example of mineral that created in Earth’s crust. About 98.5% of Earth’s crust is made up of only eight elements which are oxygen, silicon, aluminum, iron, calcium, sodium, potassium, and magnesium. These are the elements that can form different types of chemical compounds of minerals and each mineral has a specific chemical composition and chemical formula. For example, quartz is the combination of two oxygen atoms bonded to a silicon atom, SiO2 (Geoscience News and Information, 11 November 2014). Minerals also presence in hard type of mineral like a diamond as it is from by strong covalent bond of carbon. Then, softer mineral also exist which contains calcium and oxygen along with carbon which is calcite. The structure of calcite shows the relationship of calcium (Ca), carbon (C) and oxygen (O).In other aspect, the physical properties of minerals include the differentiation in the mineral’s color, the color of the powder of mineral (streak), the light reflection of mineral’s surface (luster), the specific gravity, tendency to break the flat surfaces (cleavage), the mineral breaks pattern (fracture) and the hardness (Geoscience News and Information, 11 November 2014). 2.1.2Mineral Groups Minerals can be classified into groups depend on their chemical composition. Silicates are the largest mineral group exists on Earth. Silicate minerals are the first group which has silica tetrahedron compound as the basic structure. Silica tetrahedron is the combination of one silicon atom bonds to four oxygen atoms. The common examples of silicate minerals are feldspar and quartz. Both of them are rock-forming minerals. The variety of silicate minerals can be form pyramid-shaped structure is bound to other elements, such as calcium, iron, and magnesium. Silica tetrahedrons also can combine together in six different ways to produce different types of silicates (Scientific Classifications of Mineral Groups, 11 November 2014). Native elements contain atoms of one type of element. Only a few types of minerals are found in this group. The minerals in native elements group are rarely to have and very valuable. Gold, silver, sulfur, and diamond are examples of minerals in native elements group. Next is carbonates mineral group. The carbonate structure form from one carbon atom bonded to three oxygen atoms. Carbonates also include other additional elements such as calcium, iron, and copper. For example, calcite (CaCO3) which is the most common carbonate mineral (Scientific Classifications of Mineral Groups, 11 November 2014). Halide minerals are salts that form when salt water evaporates which is involving a halogen bonded with a metallic atom. Halite is an example of halide mineral. The chemical elements in halogen group are fluorine, chlorine, bromine and iodine. While fluorite is a halide containing calcium and fluorine. Next, oxides contain one or two metal elements combined with oxygen. Most metals are found as oxides. For example, hematite (Fe2O3) which is form by two iron atoms combined with three oxygen atoms and magnetite (Fe3O4) is produced when three iron atoms combined with four oxygen atoms. Magnetite is one of the magnetic mineral and attraction of magnets can be made by this magnetite minerals. Both are the examples of iron oxides. (Scientific Classifications of Mineral Groups, 11 November 2014). Phosphate minerals are same in pattern of structure of atom in the silicate minerals. Phosphorus, arsenic or vanadium bond to oxygen to form tetrahedral in this type of phosphate minerals. There are many different minerals exist in the phosphate group but they very rarely to meet. Turquoise is an example of a phosphate mineral which consist of copper, aluminum, and phosphorus. Next, sulfate minerals contain sulfur atoms bonded to oxygen atoms. The sulfate group also may consist of many different minerals but it is not commonly known. Then, sulfides are formed when metallic elements combine with sulfur. Sulfides are slightly different from sulfate as it do not contain oxygen. Pyrite, or iron sulfide is a common example of sulfide mineral (Scientific Classifications of Mineral Groups, 11 November 2014). Minerals in the Soils of Date Palm Phoenix dactylifera has the long productivity period and did multiple purpose qualities. It is one of the old types of fruit tree and the first country of the top ten producers is Egypt. Date fruits production are commonly depend on pollination, fertilization, and water relations (Iqbal et al., 2004). Most of the date palms produced in Egypt are grown in sandy, loam and sandy loam soils. The presence of certain types of element such as N, P, K, Mg and B may cause the soils become deficient. It has also been recorded that large amounts of macro and microelements are produce high amount of date fruita for every single year. It shows that the best source of organic matter comes from the macro and micro-minerals especially in producing fruit. Application of organic fertilizers was found to enhance as well as to increase the structural stability and lowered bulk density of the soil. It improved moisture retention, water infiltration rate and the hydraulic conductivity of soil. In Egypt, the total amount of garbage collected from cities and villages reaches nearly 15 million tons per year and the proportion of domestic refuse is estimated to be about 68% (Hassanein Kandil, 2007). This could be a source of organic fertilization, after suitable composting in fruit orchards. Furthermore, few studies have evaluated the effects of organic and mineral fertilizers on the quality characteristics of date fruits and the amount of prduction(Shahein et al., 2003Al-Kharusi et al., 2009). Minerals in the Date Fruits Phosphorus was determined in date fruits by ascorbic acid method. While flame photometer used in determining potassium content in date fruits. Element such as Pb, Cd, Ca, Mg, Fe, Zn, Mn and Cu contents were measured using an atomic absorption spectrophotometer (Model 305B). The concentrations of N, P, K, Ca and Mg were expressed as percentages, while Pb, Cd, Fe, Mn, Zn, and Cu were expressed as parts per million (ppm) on dry weight basis in the previous researches. Fruit nitrate (NO3) and nitrite (NO2) contents were also been measured in that particular conducted research(Marzouk Kassem, 2010). Phoenix dactylifera Phoenix dactylifera is one of the oldest cultivated fruit crops. The date palm has long been harvested for its fleshy fruit which is a common food for many people at the residential of country such as North Africa and Arabia. There are a lof of different types of this species which each of them are grown for commercial purposes and perhaps making the date palm the second most familiar palm species after the coconut palm (Cocosnucifera). It grows with an imposing tall, slender, straight trunk with spiralling pattern on the bark, and long feather-like leaves. The common names of date palm are Palma dactylifera, Palma major, Phoenix atlantica var. maroccana, Phoenix chevalieri, Phoenix excelsior, Phoenix iberica and Phoenix major (Marzouk Kassem, 2010). Physiological Disorder of Date Palm Blacknose is the abnormally shriveled and darkened tip of date. The conditions that must be avoid too high humidity, excessive soil moisture especially at the stage of fruit development. Next is crosscut. It is a physiological disorder of fruit stalks. Crosscut or V-cuts are clean break in tissues of the fruit stalk bases and on fronds. Crop losses may be avoided by using non-susceptible varieties, or by reducing the number of fruit stalks in susceptible varieties. After that is whitenose. It is commonly occur in dry and prolonged wind. It causes rapid maturation of the fruit. The affected fruit becomes very dry, hard and has greater sugar content. Hydration may correct this condition in harvested fruits. Next, barhee disorder is unusual bending. The cause and the way to control of this disorder are unknown(Agriculture and Consumer Protection, 11 November 2014). Black scald is different from blacknose where it is a minor disorder. It consists of a blackened and sunken area with a definite line of demarcation. The disease usually appears on the tip or the sides of the fruit, and affected tissues have a bitter taste. The appearance of the disorder suggests exposure to high temperature, but the exact cause is not definitely known (Nixon, 1951). Then, bastard offshoot which is a deformed growth of date palm vegetative buds especially of offshoots fronds. It may be occur due to reduction in growth caused by an inequilibrium of growth regulators. After that is leaf apical drying that absolutely not a disease but a physiological reaction to transplantation of adult palms (injury of their root system). All palms with these symptoms recover within two to three years after their transplanting (Agriculture and Consumer Protection, 11 November 2014). Physiological disorders of date palm also include the fertilization injury. This type of injury is involving only with young tissue culture-derived palm plants (first two years after field planting) and when fertilizers (N, P, K) are applied too close to the palms stipe. The nature of fertilizers is not the cause, but rather how close to the stipe the fertilizer was applied. If the damage is severe, it could cause the death of the young palm (Agriculture and Consumer Protection, 11 November 2014). Lack or excess of water can cause the date palm having a physiological disorder. The growth of the date palm is highly affected by variations in water availability and the water content of the soil. A decrease in yield or complete failure in fruit production could result from these water variations. Although date palms are resistant to flooding, healthy growth of palms requires a well-drained soil, and it is clear that irrigation must always go hand in hand with drainage. Serious losses, sometimes irreversible may occur in neglected date plantations. In such cases signs of decline appear on palms favored by root penetration of numerous saprophytes and parasites that could lead to the death of palms (Agriculture and Consumer Protection, 11 November 2014). 3.6AAS Atomic Absorption Spectroscopy in analytical chemistry is a technique for determining the concentration of a particular metal element within a sample. This spectroscopic instrument involving atomic emission which is the flame test. When a small amount of a solution of a metal ion is placed in the flame of a Bunsen burner, the flame turns a color that is characteristic of the metal ion. A sodium solution gives a yellow color, a potassium solution results in a violet color and a copper solution gives a green color. Hollow Cathode Lamp is one of the instrument components in AAS. It is the light source and the exactly light required for analysis although no monochromator is used. The reason for this is that atoms of the metal to be tested are present within the lamp, and when the lamp is on, these atoms are supplied with energy, which causes them to elevate to the excited states. Upon returning to the ground state, exactly the same wavelengths that are useful in the analysis are emitted, since it is the analyzed metal with exactly the same energy levels that undergoes excitation. The AAS instrument is as follows. Figure 1: Schematic diagram of AAS instrumentation. 4.0Problem Statement Mineral composition in soil important for plants which affect the production of fruits. Thus, it is needed to determine the types of mineral that suitable for fruits, for example the date fruits. There are cases where the date palm from the same area can produce fruit while some of the plants have no fruit. It could be happened because the soils are from different sources during plantation process and it also has different composition of minerals. Since the date fruits production might be related to the composition of minerals in soil, the determination of minerals in soils and date fruits have to be conducted in order to study the correlation between them. Objective The objectives in conducting this research are: To determine the minerals contain in the soil from date palm. To determine the minerals contain in date fruits. To find the correlation between the minerals in the soil and the minerals in date fruits.

Why Walk

Why walk walking as a perfect form of exercise. There are definite benefits of walking to both your physical and mental wellness. the original zero-emission transport We all know the environment could do with a helping hand, and by swapping your car for your feet you’ll be doing just that. Walking, as well as being one of the cheapest ways of getting around, is also the smartest for our planet. You won’t leave a carbon footprint, just your own. did you know? If we all swapped one car journey a week for walking instead, car traffic levels would reduce by at least 10%;We all know we need to reduce our CO2 emissions. By changing some of our travel behaviour, we all have the power to contribute and act on climate change; Local shops are easy to reach on foot and using them helps to support local business and save food miles; Less busy roads will give us safer and quieter streets – who knows, we may even see more children playing outside just like we used to. It's fre e! There's no special skill, training, or equipment needed – all you need is the right footwear Walking is free. Walking doesn’t involve bulky and expensive vehicles or dangerous fuel.Walking doesn’t produce excess carbon dioxide or fumes or cause noise pollution Walking is a more efficient use of space: 20 times as many people can move in the same space by walking as in a car Walking and public transport are perfect partners. If we all swapped one car journey a week for walking instead, car traffic levels would reduce by at least 10%. If every car driver in the UK left their car at home once a month and walked for 20 minutes instead, we could save up to 320,000 tonnes of carbon dioxide each year, the same amount produced by 50,000 homes.Car users regularly suffer up to three times as much pollution as pedestrians because they are sitting in traffic in the line of exhaust fumes from the car in front. Walking also has indirect environmental benefits. The more we walk, the more we take an interest in our surroundings. The more people use parks, green spaces, attractive urban public spaces and the countryside, the more likely it is that money will be spent to preserve, maintain and improve them. Walking helps create better and more prosperous places to live People on foot are likely to spend more at local shops and businesses.More people out walking on the streets helps deter crime and makes places feel safer. Before industrialisation took place there were some alternatives such as riding animals, horse drawn carriages and water transport, but walking must have been by far the most substantial transport mode. The Roman roads of 2000 years ago were predominantly used by pedestrians. Conflicts between pedestrians and wheeled traffic did occur, however, especially in urban areas. For example Hass-Klau (1990) mentions that Julius Caesar banned chariots from the streets in Rome between sunrise and sunset to offer space to the pedestrian.Since the nineteenth century the development of railway and highway systems have led to dramatic changes in travel behaviour towards motorised transport modes. In addition, the bicycle became available as a possible substitute for the pedestrian. Why Not Walk? We’re all good at thinking of reasons why not to get more active, but there are many more reasons why we should. Regular walking improves your general health and reduces your risk of heart disease, some cancers, and Type 2 diabetes. It’s also a great way to lose weight, improve your fitness and your mental health and wellbeing.Read more about the benefits of walking. For those who still aren’t convinced, here are some answers to the most common excuses! â€Å"I don’t have the time. † Walking is by far the easiest exercise to fit into a busy lifestyle since you can do it anywhere at a time that suits you. Every minute you spend walking is quality time, rather than sweating on a packed bus or train or fu ming in a traffic jam. You’ll still have to make a little effort to find time, but remember active people live longer and have a healthier old age – so think of your walking time as a good investment. â€Å"I don’t know any good places to walk. Sometimes main roads don’t feel pleasant and safe for walkers. But there are plenty of quieter streets, parks, watersides and green spaces even in busy urban areas if you know where to look for them. Read more about finding good places to walk and free walking routes for beginners. â€Å"I don’t feel safe on the streets. † It’s understandable that people are concerned for their personal safety and security – but it’s a great shame if this stops you enjoying the benefits of walking. If you can, walk with a companion, or read our advice on staying safe. Also, the more people walk, the safer the streets will be. I don’t have anyone to walk with. † Why not ask your famil y, friends and colleagues if they’re interested in walking with you? Or try an organised programme or led walk. Read more about walking in a group. Where people walk Walking is a common movement in urban transport, as nearly everyone is a pedestrian for part of their trips, but walking as a means of transport is often overlooked walking should not be neglected in these countries as it also is important in connection with other modes. for example, walking from the parking place to the final destination; biking to the railway station, etc.

Group Process Paper

Doing this project on India together with Laura, Patrick, and Tsukasa has been very satisfying. I usually do not like to work in groups because I end up doing everything; however this project was truly an exception. It was a very interesting project in which you learn a lot not only from the assigned country but from the teammates. I was pretty much the leader by establishing dates and meetings, and assigning parts to everyone. Still, everyone cooperated equally and very responsibly.Patrick always had good and interesting information to share, Tsukasa did a superb effort and did her work best as she could, and Laura aided tremendously with the powerpoint presentation. Each team member was very committed and motivated, as well as optimistic. I am glad that we never had any type of conflicts; we pretty much seemed to bond and agree on everything. I guess this is not the typical team project you usually have to do. Beyond that, it is an opportunity to bond and get to know your teammates in a deep way.We were very lucky to all be international students; and nothing against Americans, but I prefer it! We even went for lunch once and talked a lot about Germany, Japan, and the Dominican Republic. If I had to choose a team for a class project, I would choose my team without thinking about it twice. It was a fun, and interactive project with excellent teammates. We all learned together about India, as well as from our different cultures!

Personal Definition Of Nursing By Applying The Author s...

The purpose of this paper is to inform the reader of the author’s personal definition of nursing by applying the author’s personal experiences and beliefs. The author will incorporate caring into the nursing practice and what makes nursing a profession. This paper is also to inform the reader about Immigration, how it is changing healthcare, and what the general mission of nursing should be in the United States of America. Personal Experience There are so many things that I can discuss in this section to explain why I wanted to become a nurse. It can easily be discussed that I wanted to become a nurse to help people but that barely touches the surface. I can review my previous degree in Addiction Studies and counseling and how I†¦show more content†¦My sister, Brittney, was given the task from her manager to take a person to dinner that she admired and respected, to my surprise she chose me. How can so many people see something in me that I did not know was there. Nursing is my life and going back to become a Licensed Practical Nurse (LPN) was one of the most challenging and rewarding things I have ever done. Subconsciously I feel like this profession chose me. â€Å"Each one should use whatever gift he has received to serve others, faithfully administering God’s grace in various forms† (1 Peter 4:10, New International Version). God has given us all talents, abilities, and gifts to serve other people with. God gave me the gift of service. This gift is exercised by myself everyday through my job as an LPN at a local wound care clinic. The patient’s I see on a daily basis not only benefit from the care they receive by me; they also change me and assist in my personal growth. To have a patient lead a prayer with you is the most rewarding and touching experience you can ever have. Nursing was put in my life and I am here to serve my patients to the best of my ability and knowledge gained by keeping up with evidence based practices and working closely with my peers. Nursing as a Profession According to Catalano (2015), the definition of a profession is a type of occupation that requires prolonged preparation and formal qualifications and meets certain higher level criteria

How can a company create value - Free Essay Example

Sample details Pages: 8 Words: 2313 Downloads: 2 Date added: 2017/06/26 Category Finance Essay Type Narrative essay Did you like this example? Discuss, with the aid of examples, how a company can create value THEORETICAL BASIS FOR VALUE CREATION Companies create value by investing capital to generate future cash flows through its business operations at a rate exceeding the cost of capital. Numerically, the value of a company can be defined as the sum of present values of free cash flows (FCF) expected in the future, and is given by the mathematical expression, Don’t waste time! Our writers will create an original "How can a company create value?" essay for you Create order where FCFt is the free cash flow in year t, and WACC is the weighted average cost of capital. This can be simplified into the expression, where NOPLAT1 is the net operating profit less adjusted taxes in the first year, ROIC is the return on invested capital, and g is the annual rate at which FCF grows (Koller, 2010). When the investment rate is constant and NOPLAT is proportional to the revenues, the revenues of a company will also grow at the same rate g as the cash flows. Thus from the above expression, the value of a company is driven by its revenue growth (g) and the return of invested capital (ROIC). Figure 1 shows a contour plot of value vs. growth and ROIC with a NOPLAT of 100 and WACC at 10%. Figure 1: Contour Plot of Value vs. g and ROIC It is clear from the contour plot that higher growth leads to increase in value, but only when ROIC is greater than WACC. It is also evident from the arrows on Fig.1 that in order to create value, higher growth companies should focus on increasing ROIC and higher ROIC companies focus on growth. From the above theoretical basis, it is evident that in order to increase their value, companies must undertake activities that result in growing the business and/ or increasing the return on invested capital (ROIC) as appropriate, while avoiding short-term growth in free cash flows (and dividends) achieved by cutting down on investments that could increase the value on a longer term. As a corollary, if a company undertakes actions that do not produce incremental cash flows, then there is no additional value created. Activities such as share repurchases and financial engineering do not generally create value for this reason. Grullion and Michaely have demonstrated statistically that dividends and repurchases are substitutes (2002, p.1682). However share repurchases could help avoid value destruction, when a company has a high likelihood of investing cash at low returns (Koller, 2010). EXAMPLES OF ACTIVITIES UNDERTAKEN BY COMPANIES TO CREATE VALUE Gaining Competitive Advantage A companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s ROIC depends directly on its competitive advantage enabling it to charge a price premium on its products and services or produce them more efficiently (at lower cost or lower capital), or both. Companies can charge a price premium if they produce innovative and high quality products, build a great brand and through customer lock-in. In commodities or commoditised products and services, rational price discipline by the players in the industry can help keep up the lower bound on prices. Cost and capital efficiencies can be built through innovative business and operating models, leveraging economies of scale and through scalable products. Product Innovation. Tesla Motorsà ¢Ã¢â€š ¬Ã¢â€ž ¢ electric cars are good examples of product innovation as a strategy adopted by a company. Their Model S has economy, performance and range (over 200 miles) as the key differentiating factors over other competitors, with a price premium well over $25,000 on comparable electric cars (Davis, 2013). Product Quality. While reputation for quality products helps to charge a price premium (as in the case of BMW and Audi cars), product quality programmes such as Six Sigma have been demonstrated to reduce unit cost of products/ services in Bank One, Lockheed Martin, Stanford Hospital and Clinics and of course General Electric (George, M., 2003). Brand Creation. Samsung spent over $4.3 billion in advertising, ranking in brand value at 9 from 53 (Forbes). Their products such as Ultrabooks demand premiums prices well over the other competitors and on par with Appleà ¢Ã¢â€š ¬Ã¢â€ž ¢s laptops. Brands also drive volumes as evidenced by Coca-cola and McDonalds, leading to value creation through economies of scale (Forbes). Innovative Business Methods. Structuring the business model and operations to reduce waste and complexity can result in significant cost efficiencies. Southwest Airlines avoided complexity by operating only one type of aircraft (Boeing 737) in contrast to American Airlines which operated up to 14 different types of aircraft during 1996-2001. As a result, Southwest had about 40% lesser cost of airline operations per seat-mile during in 2001 compared to American Airlines, while its share price doubled (George, M., 2004, p.6-8) Growth Initiatives When ROIC is high, growth drives value quickly as seen in Figure 1. The following are a couple of examples of how companies create value through growth Create New Markets There is perhaps no better example than tablet computers for the creation of a new market. Apple identified a market gap and released a revolutionary new product, iPad. Within the first quarter, iPad became Appleà ¢Ã¢â€š ¬Ã¢â€ž ¢s third largest revenue segment surpassing iPod (https://www.businessinsider.com/chart-of-the-day-ipad-ipod-mac-2010-7). Persuade existing customers to buy more Insurance companies such as Aviva offer loyalty discounts to persuade its car insurance customers to buy home of life insurance thus driving growth. Technology companies such as Samsung attract customers to buy other products such as Galaxy Gear watch by offering integration with its phones. Also, technology companies persuade their customers to buy compatible accessories for phones and tablets. Granular growth In order to determine the areas of growth within the portfolio, a high level cut by business or geography is not sufficient. According to Baghai (2009, p.88-89), a granular analysis to identify micro-segments of customers, geographies, regions and products is essential, before investing in RD, advertising and other growth investments. Baghai gives an example of a semiconductor manufacturer who reallocated 30% of RD resources to highly promising segments resulting in faster than the market growth within two years. Mergers Acquisitions Jack Welch, the CEO of General Electric during 1981-2001 adopted a à ¢Ã¢â€š ¬Ã…“fix, sell or closeà ¢Ã¢â€š ¬Ã‚  strategy for underperforming business units. In the first four years of his tenure, he divested 117 business units, accounting for 20% of GEà ¢Ã¢â€š ¬Ã¢â€ž ¢s assets. It is well known the GEà ¢Ã¢â€š ¬Ã¢â€ž ¢s share during his 20 year tenure rose by 4000%. According to a study performed on 200 companies during 1900-2000, on an average, $100 invested in January 1990 in a company actively managing its business portfolio would be worth $459 by the end of the decade, while that same $100 would have grown to only $353 if invested in company passively managing its business portfolio (Dranikoff, 2002, p.75-76). This approach to fix, sell or close based on value can be applied to the portfolio of products and service offerings of a company in order to increase its value. Explain how to value companies using the cash flow-based approach and the difficulties that may arise in the application of such an approach in the real-world. The enterprise DCF method discounts free cash flows (FCF), available to all investors including equity holders, debt holders and non-equity investors, at the weighted average cost of capital (WACC). Enterprise DCF method is a carried out as shown in the process below (Koller, 2010): Determine the value operations of a company by discounting FCF at WACC Identify and value non-operating assets such as nonconsolidated subsidiaries, equity investment, and add it to the value of operations to obtain the enterprise value Identify and value all debt and non-equity claims such as unfunded pension liabilities, employee stock options, etc. Subtract the non-equity value from the enterprise value to obtain equity value. Calculate the price per share by dividing the equity value by current number of undiluted shares. Valuing Operations Using DCF method to value operations requires a forecast of future FCF and WACC at which cash flows must be discounted. Historical values of FCF and WACC are necessary before they could be forecasted. To calculate FCF for past and current years, NOPLAT and change in Invested Capital are obtained first from the rearranged financial statements, from which FCF is derived. ROIC is then calculated as the ratio of NOPLAT to the Invested Capital. The figures thus obtained are used to perform historical analysis of the company, especially to understand how the value drivers, namely ROIC and growth have behaved in the past, in order to estimate their future values. Forecasts for ROIC and growth are determined using sell-side analysis. FCF forecasts are obtained from the forecasts for NOPLAT and Invested Capital derived. A major difficulty in this process is that these forecasts cannot be projected beyond a few years. Therefore, the Continuing Value of the company must be added to the Present Value of the FCF projected for the forecasted years. The value of the operations thus determined is given by the expression (Koller, 2010): Value of Operations = PV of FCF during forecast period + Continuing Value (which is the PV of FCF during the years beyond the forecast period). NOPLAT in the year following the forecast period is required to calculate Continuing Value. RONIC (return on new capital) and growth (g) are calculated as long run forecasts. WACC is required both to discount cash flows during the forecast period as well as to determine the continuing value. It is calculated as a blended rate of the cost of capital of equity (ke) and debt (kd). Koller (2010, p.113) gives the following expression for WACC: where D is the debt and E the equity of a company at market values, while Tm is the marginal tax rate. Applying a constant WACC to determine the present value of all future cash flows is based on the assumption that the capital structure (debt to equity ratio) is constant throughout the future. This is however not true in real life. WACC can be adjusted to account for the lack of stability in debt to equity ratio, but the process is very complicated. Instead, it is recommended that Adjusted Present Value (APV) method be used in such circumstances (Koller, 2010). Some of the real world problems faced while valuing companies could be summarised as below: Company financial statements provide only historical data while DCF method requires future projections of FCF and WACC. It is not easy to obtain forecasts beyond a few years Assuming WACC to be constant throughout is not realistic and can skew the results Significant changes in debt to equity ratio can make cash flow based valuation a very difficult exercise According to Jacobs and Shivdasani (2012. p.119-124), the following are some specific practical issues identified in a survey conducted by Association for Finance Professionals (AFP): Forecast horizon varies significantly among the practitioners (5-15 years) While cost of equity (required to calculate WACC) is estimated using Capital Asset Pricing Model (CAPM) by most respondents, the definitions of factors used in this method, viz., risk free rate, market premium and beta varied significantly (eg. beta period from 1-5 years). Similarly, inconsistent definitions of cost of debt (required for WACC calculation) were reported to be used by the respondents Nearly 50% of the respondents of a survey conducted by Association of Finance Professionals (AFP) admitted that the discount rate (WACC) they use is likely to be 1% more or less than the companyà ¢Ã¢â€š ¬Ã¢â€ž ¢s true rate. This becomes a key issue in valuation as it has been shown that a 1% drop in the cost of capital could influence the US companies to invest an additional $150 billion over three years. Over half of the respondents have using book value of equity instead of market value to calculate debt to equity ratio (required for WACC). But in real life the difference can be 10 fold (eg. IBM, Delta Airlines) resulting in WACC to be underestimated by about 2-3%. Valuation of Non-Operating Assets Enterprise value is obtained by adding the value of non-operating assets to the operating value. Non-operating assets include non-consolidated subsidiaries, excess cash, tradable securities and customer financing arms. Net income from non-consolidated subsidiaries cannot be included in the free cash flows to calculate value as it will distort the margins due to the fact that the corresponding revenues are not recognised in this calculation. Therefore, they must be valued separately. A practical difficulty in this process is the level of accuracy in estimating the value of non-consolidated subsidiaries due to the fact that it depends on how much other companies owing these subsidiaries disclose the required information (Koller, 2010). Identifying and Valuing Non-equity Claims In order to obtain equity value, the value of non-equity claims (such as interest bearing debt, unfunded pensions, capitalised operating leases and employee stock options) must be subtracted from the enterprise value. 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